UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-7149
SMITH BARNEY OREGON MUNICIPALS FUND
(Exact name of registrant as specified in charter)
125 Broad Street, New York, NY 10004
(Address of principal executive offices) (Zip code)
Robert I. Frenkel, Esq.
Smith Barney Fund Management LLC
300 First Stamford Place
Stamford, CT 06902
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 451-2010
Date of fiscal year end: APRIL 30
Date of reporting period: OCTOBER 31, 2003
ITEM 1. REPORT TO STOCKHOLDERS.
The SEMI-ANNUAL Report to Stockholders is filed herewith.
SMITH BARNEY
OREGON MUNICIPALS FUND
CLASSIC SERIES SEMI-ANNUAL REPORT OCTOBER 31, 2003
[GRAPHIC OMITTED]
Your Serious Money. Professionally Managed. (Registered Trademark) is a
registered service mark of Citigroup Global Markets Inc.
NOT FDIC INSURED o NOT BANK GUARANTEED o MAY LOSE VALUE
WHAT'S INSIDE
LETTER FROM THE CHAIRMAN .................................. 1
SCHEDULE OF INVESTMENTS ................................... 4
STATEMENT OF ASSETS AND LIABILITIES ....................... 12
STATEMENT OF OPERATIONS ................................... 13
STATEMENTS OF CHANGES IN NET ASSETS ....................... 14
NOTES TO FINANCIAL STATEMENTS ............................. 15
FINANCIAL HIGHLIGHTS ...................................... 22
LETTER FROM THE CHAIRMAN
Dear Shareholder,
[PHOTO OMITTED]
R. JAY GERKEN, CFA
Chairman, President and
Chief Executive Officer
When the period began, a weak economy and expectations that the Fed would cut
its target for short-term interest rates triggered investor demand for
fixed-income products. Consequently, many fixed-income investments, including
municipal bonds, appreciated substantially in May. Amidst this, many states,
including Oregon, have been grappling with budget deficits brought on by the
faltering economy, layoffs and declining incomes--all leading to lower tax
revenues. In an effort to jumpstart the weak economy, the Fed eased in late
June, driving the federal funds rate(1) to just 1%, its lowest level since the
Eisenhower Administration. The bond markets subsequently experienced a sharp
reversal, particularly in July, as signs emerged that economic growth was more
robust than previously thought. Although the bond markets vacillated through the
end of October, municipal bonds categorically held up relatively well over the
six months ended October 31, 2003.
Despite the challenging environment for the bond markets during the period, we
are pleased to report that the Smith Barney Oregon Municipals Fund (Class A
Shares) generated a competitive performance during the six months ended October
31, 2003. The fund, which gained 2.97%, excluding sales charges, outperformed
the unmanaged broad-based Lehman Brothers Municipal Bond Index,ii which
returned 1.47% for the period. Your fund also outperformed its Lipper peer
group of Oregon municipal debt funds, which had an average return of 1.31%.1
Furthermore, as of October 31st the fund continued to finish among the leaders
in its Lipper peer group in terms of the level of tax-exempt income that it
provided. Certain investors may be subject to the federal Alternative Minimum
Tax, and state and local taxes may apply. Capital gains, if any, are fully
taxable. Please consult your personal tax adviser.
(1) Lipper Inc. is a major independent mutual-fund tracking organization.
Returns are based on the six-month period ended October 31, 2003,
calculated among 22 funds in the Oregon municipal debt funds category with
reinvestment of dividends and capital gains and excluding sales charges.
1 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
PERFORMANCE SNAPSHOT
AS OF OCTOBER 31, 2003
(excluding sales charges)
6 Months
--------
Class A Shares 2.97%
Lehman Brothers Municipal Bond Index 1.47%
Average of Lipper Oregon municipal debt fund s 1.31%
Class A share returns assume the reinvestment of income dividends and
capital gains distributions at net asset value and the deduction of all fund
expenses. Returns have not been adjusted to include sales charges that may
apply when shares are purchased or the deduction of taxes that a shareholder
would pay on fund distributions. All figures represent past performance and
are not a guarantee of future results. Principal value and investment
returns will fluctuate and investors' shares, when redeemed may be worth
more or less than their original cost. Results of other share classes may
vary.
The Lehman Brothers Municipal Bond Index is a broad measure of the municipal
bond market. Please note that an investor cannot invest directly in an
index. Index performance reflects no deduction for fees, expenses or taxes.
Lipper Inc. is a major independent mutual-fund tracking organization.
Returns are based on the six-month period ended October 31, 2003, calculated
among 22 funds for the six-month period in the fund's Lipper peer group
including the reinvestment of dividends and capital gains and excluding
sales charges.
Certain investors may be subject to the federal Alternative Minimum Tax, and
state and local taxes may apply. Capital gains, if any, are fully taxable.
Please consult your personal tax adviser.
Special Shareholder Notice
It is with great sadness that we bring to your attention the passing of Alfred
J. Bianchetti, Director Emeritus, and James J. Crisona, Director Emeritus, of
the fund. Messrs. Bianchetti and Crisona, who both passed away on September
4th, lived accomplished lives to the ages of 80 and 97, respectively. We will
sorely miss their presence and will remember the dedicated service they
provided to the fund's shareholders through their outstanding contributions as
long-term members of the Board.
2 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
In this environment of bond volatility marred by budget deficits, it is
critical to perform a thorough analysis before carefully choosing municipal
bonds. In our opinion, this is all the more reason why investing in municipal
bonds with a professional fund manager is a more prudent strategy than buying
these bonds directly. Fund managers can provide the diversification and
thorough credit analysis that is so important in managing risk. Consult your
financial adviser to help you determine your proper allocation to fixed-income
securities based on your risk/reward profile and to explore the role they can
play in pursuing your long-term financial goals.
As always, thank you for your continued confidence in our stewardship of your
assets.
Sincerely,
/s/ R. Jay Gerken
R. Jay Gerken, CFA
Chairman, President and Chief Executive Officer
November 19, 2003
The information provided is not intended to be a forecast of future events, a
guarantee of future results or investment advice. Views expressed may differ
from those of the firm as a whole.
Portfolio holdings and breakdowns are as of October 31, 2003 and are subject to
change. Please refer to pages 4 through 8 for a list and percentage breakdown
of the fund's holdings.
i The federal funds rate is the interest rate that banks with excess reserves
at a Federal Reserve district bank charge other banks that need overnight
loans.
ii The Lehman Brothers Municipal Bond Index is a broad measure of the
municipal bond market. Please note that an investor cannot invest directly
in an index.
Additional Information About Your Fund
The Fund's Adviser and some of its affiliates have received requests for
information from various government regulators regarding market timing, late
trading, fees and other mutual fund issues in connection with various
investigations. The Adviser and its affiliates are responding to those
information requests, but are not in a position to predict the outcome of these
requests and investigations.
3 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Schedule of Investments (unaudited) October 31, 2003
FACE
AMOUNT RATING(a) SECURITY VALUE
- ------------ ----------- ------------------------------------------------------------- -------------
Education -- 27.3%
Clackamas County GO:
$ 500,000 AA-- Canby School District No. 86, School Board Guaranty,
5.250% due 6/15/20 (b) $ 530,900
500,000 Aaa* Lake Oswego School District No. 7J, MBIA-Insured,
5.000% due 6/1/26 (b) 507,855
300,000 Aaa* Deschutes County GO, Administrative School District No. 1,
Series A, FSA-School Board Guaranty,
5.500% due 6/15/18 (b) 328,233
850,000 AA Forest Grove, Campus Improvement & Refunding Revenue,
Pacific University, Radian-Insured, 6.300% due 5/1/25 (b) 947,402
500,000 AAA Jackson County GO, Central Point School District No. 6,
FGIC-School Board Guaranty, 5.250% due 6/15/20 (b) 528,825
500,000 AAA Jefferson County GO, School District No. 509J, FGIC-School
Board Guaranty, 5.250% due 6/15/16 (b) 548,185
500,000 AAA Lane County GO, Bethel School District No. 52, FGIC-Insured,
6.400% due 12/1/09 570,855
2,000,000 Aaa* Lane County GO, School District No.4J, Eugene, FSA-Insured,
5.000% due 7/1/17 2,125,440
500,000 Aaa* Multnomah-Clackamas Counties GO, Centennial School
District No. 28-302, FGIC-School Board Guaranty,
5.000% due 6/15/21 517,565
600,000 BBB+ Multnomah County, Educational Facilities Revenue,
(University of Portland Project), 6.000% due 4/1/25 635,538
500,000 AA-- Multnomah County GO, Reynolds School District No. 7,
School Board Guaranty, 5.125% due 6/15/20 522,550
500,000 AAA Oregon State Department of Administrative Services, COP,
Series A, AMBAC-Insured, (Call 5/1/10 @ 101),
6.250% due 5/1/17 (c)+ 601,915
Oregon State Health, Housing, Educational & Cultural
Facilities Authority, Series A:
1,000,000 Baa1* Linfield College Project, 6.625% due 10/1/20 1,100,350
430,000 NR Oak Tree Foundation Project, (Call 5/1/05 @ 101),
6.100% due 5/1/15 (c) 464,757
Western States Chiropractic, ACA-Insured:
785,000 A 6.350% due 12/1/20 873,807
545,000 A 6.350% due 12/1/25 593,271
500,000 AAA Tillamook County GO, School District No. 9, FSA-School
Board Guaranty, 5.250% due 6/15/22 528,695
500,000 A University of the Virgin Islands, Refunding & Improvement
Bonds, Series A, ACA-Insured, 6.250% due 12/1/29 539,500
500,000 Aaa* Washington County GO, Forest Grove School District No. 15,
FSA-School Board Guaranty, 5.000% due 6/15/21 515,935
1,135,000 Aaa* Washington, Multnomah & Yamhill Counties GO, School
District No. 1J, MBIA-Insured, 5.125% due 6/1/17 1,211,567
- -----------------------------------------------------------------------------------------------------
14,193,145
- -----------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
4 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Schedule of Investments (unaudited) (continued) October 31, 2003
FACE
AMOUNT RATING(a) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------
Finance -- 2.1%
$1,000,000 BBB-- Virgin Islands, Public Finance Authority Revenue, Series A,
Gross Receipts Taxes, 6.500% due 10/1/24 $1,109,180
- -----------------------------------------------------------------------------------------------------
Hospitals -- 19.1%
Clackamas County, Hospital Facility Authority Revenue:
500,000 AA Gross-Williamette Falls Hospital Project, Radian-Insured,
5.500% due 4/1/22 (b) 527,845
Legacy Health System:
500,000 AA 5.750% due 5/1/16 (b) 541,950
1,000,000 AA 5.250% due 5/1/21 (b) 1,026,860
1,000,000 Baa2* Williamette Falls Hospital Project, 6.000% due 4/1/19 (b) 1,016,040
1,000,000 AA Hillsboro Hospital Facility Authority Revenue,
(Tuality Healthcare Project), Radian-Insured,
5.375% due 10/1/31 (b) 1,030,780
Klamath Falls, Inter-Community Hospital Authority Revenue:
595,000 BBB+++ Gross-Merle West Medical Center Project,
7.100% due 9/1/24 (b) 636,025
1,000,000 BBB+++ Merle West Medical Center Project, 6.250% due 9/1/31 1,030,970
370,000 AA Oregon State, Veterans Welfare, Series 80A,
5.700% due 10/1/32 380,101
Puerto Rico Industrial, Tourist, Educational, Medical &
Environmental Control Facilities Financing Authority,
Series A:
275,000 BBB-- Mennonite General Hospital Project,
5.625% due 7/1/27 225,299
1,000,000 BBB-- Ryder Memorial Hospital Project, 6.700% due 5/1/24 1,010,210
Umatilla County Hospital Facility Authority Revenue,
Catholic Health Initiatives, Series A:
1,000,000 AA 5.750% due 12/1/20 1,045,470
500,000 AA 5.500% due 3/1/22 517,980
1,000,000 NR Yamhill County Hospital Authority, Friendsview Retirement
Community, 7.000% due 12/1/34 962,660
- -----------------------------------------------------------------------------------------------------
9,952,190
- -----------------------------------------------------------------------------------------------------
Housing: Multi-Family -- 8.9%
470,000 NR Multi-Family Housing Revenue Bond Pass-Through
Certificates Beneficial Ownership, Pacific Tower
Apartments, Series 6, 6.050% due 11/1/34 460,337
200,000 Aa2* Oregon State Housing & Community Services Department,
Housing Finance Revenue, Assisted or Insured Multi-Unit,
Series A, FHA-Insured, 6.800% due 7/1/13 200,150
Portland Housing Authority, Multi-Family Revenue:
850,000 Aa2* Cherry Ridge Project, LOC-U.S. Bank Trust N.A.,
6.250% due 5/1/12 (d) 870,816
SEE NOTES TO FINANCIAL STATEMENTS.
5 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Schedule of Investments (unaudited) (continued) October 31, 2003
FACE
AMOUNT RATING(a) SECURITY VALUE
- ------------------------------------------------------------------------------------------------
Housing: Multi-Family -- 8.9% (continued)
Series A:
$ 500,000 Aa1* Cherry Blossom Apartments, GNMA-Collateralized,
6.100% due 12/20/26 (d) $ 523,260
300,000 AAA Fairview Woods Project, Sr. Lien, (Call 8/1/04 @ 100),
6.875% due 8/1/14 (c) 312,867
Washington County Housing Authority, Multi-Family
Revenue:
1,000,000 NR Affordable Housing Pool, Series A, 6.125% due 7/1/29 1,000,470
1,000,000 Aa2* Bethany Meadows Project, LOC-U.S. Bank N.A.,
6.250% due 8/1/13 (d) 1,044,540
220,000 AAA Terrace View Project, FNMA-Collateralized,
5.500% due 12/1/17 (d) 226,387
- ------------------------------------------------------------------------------------------------
4,638,827
- ------------------------------------------------------------------------------------------------
Housing: Single-Family -- 3.5%
Oregon State Housing & Community Services Department,
Mortgage Revenue, Single-Family Mortgage Program:
Series B:
365,000 Aa2* 6.250% due 7/1/29 (d) 381,228
220,000 Aa2* Pool-Insured, 6.875% due 7/1/28 220,948
195,000 Aa2* Series D, 6.500% due 7/1/24 (d) 200,111
490,000 Aa2* Series F, 5.550% due 7/1/30 500,393
295,000 AAA Puerto Rico Housing Bank & Finance Agency, Single-Family
Mortgage Revenue, Affordable Housing
Mortgage-Portfolio I, GNMA/FNMA/FHLMC-Collateralized,
6.250% due 4/1/29 (d) 305,228
185,000 AAA Virgin Islands HFA, Single-Family Revenue Bonds, GNMA
Mortgage-Backed Securities Program, Series A,
GNMA-Collateralized, 6.450% due 3/1/16 (d) 191,599
- ------------------------------------------------------------------------------------------------
1,799,507
- ------------------------------------------------------------------------------------------------
Industrial Development -- 1.7%
1,000,000 BB+ Oregon State EDR, Georgia-Pacific Corp., Series CLVII,
6.350% due 8/1/25 (d) 907,170
- ------------------------------------------------------------------------------------------------
Life Care Systems -- 5.0%
Clackamas County, Hospital Facility Authority Revenue:
2,000,000 NR Mary's Woods at Marylhurst Inc., Sr. Living Facility,
Series A, 6.625% due 5/15/29 (b)(c) 2,085,840
500,000 NR Robison Jewish Home Project, 6.250% due 10/1/28 500,880
- ------------------------------------------------------------------------------------------------
2,586,720
- ------------------------------------------------------------------------------------------------
Miscellaneous -- 7.6%
300,000 NR Lebanon Urban Renewal Agency, 5.500% due 6/1/14 323,511
SEE NOTES TO FINANCIAL STATEMENTS.
6 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Schedule of Investments (unaudited) (continued) October 31, 2003
FACE
AMOUNT RATING(a) SECURITY VALUE
- ---------------------------------------------------------------------------------------------------
Miscellaneous -- 7.6% (continued)
$ 500,000 NR Northern Mariana Islands Commonwealth, Series A,
7.375% due 6/1/30 $ 516,330
2,000,000 AAA Puerto Rico Commonwealth, RITES-PA 931, XLCA-Insured,
9.527% due 7/1/17 (e) 2,571,880
500,000 A Virgin Islands, Public Finance Authority Revenue, Sr. Lien,
Series A, ACA/CBI-Insured, 5.500% due 10/1/18 532,605
- ---------------------------------------------------------------------------------------------------
3,944,326
- ---------------------------------------------------------------------------------------------------
Public Facilities -- 2.3%
500,000 AAA Oregon State Bond Bank Revenue, Economic & Community
Development Department, Series B, MBIA-Insured,
5.500% due 1/1/26 533,320
1,000,000 AAA Puerto Rico Public Buildings Authority Revenue Guaranteed,
Convertible Capital Appreciation, Series D,
AMBAC-Insured, zero coupon bond to yield
5.120% due 7/1/31 650,720
- ---------------------------------------------------------------------------------------------------
1,184,040
- ---------------------------------------------------------------------------------------------------
Solid Waste -- 3.9%
1,975,000 NR Wasco County Solid Waste Disposal Revenue, (Waste
Connections Inc. Project), 7.250% due 3/1/21 (d) 2,050,544
- ---------------------------------------------------------------------------------------------------
Transportation -- 11.2%
Oregon State Department of Transportation, Highway User
Tax Revenue:
500,000 AA+ 5.375% due 11/15/20 538,260
Series A:
1,000,000 AA+ 5.500% due 11/15/14 1,128,880
1,000,000 AA+ 5.500% due 11/15/18 1,103,150
1,000,000 AA+ 5.500% due 11/15/20 1,088,210
1,000,000 AAA Port of Portland Airport Revenue, Portland International
Airport, Series B, AMBAC-Insured, 5.500% due 7/1/18 (d) 1,055,140
500,000 CCC Puerto Rico Port Authority Revenue, Special Facilities,
American Airlines Inc., Series A, 6.250% due 6/1/26 (d) 349,395
500,000 AA+ Tri-County Metropolitan Transportation District Revenue,
Series A, 5.375% due 8/1/20 535,350
- ---------------------------------------------------------------------------------------------------
5,798,385
- ---------------------------------------------------------------------------------------------------
Utilities -- 2.3%
1,000,000 BB+++ Klamath Falls Electric Revenue, Klamath Cogeneration,
Sr. Lien, 6.000% due 1/1/25 (b) 939,580
140,000 AAA Puerto Rico Commonwealth, Aqueduct & Sewer Authority
Revenue, 10.250% due 7/1/09 173,772
100,000 NR Western Generation Agency, Cogeneration Project
Revenue, (Wauna Cogeneration Project), Series B,
7.250% due 1/1/09 (d) 102,881
- ---------------------------------------------------------------------------------------------------
1,216,233
- ---------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
7 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Schedule of Investments (unaudited) (continued) October 31, 2003
FACE
AMOUNT RATING(a) SECURITY VALUE
- ---------------------------------------------------------------------------------------------------
Water and Sewer -- 5.1%
$ 360,000 AA-- Clackamas County Service District No. 1, Sewer Revenue,
6.375% due 10/1/14 (b) $ 408,056
500,000 AAA Eugene Water Revenue, Utility System, FSA-Insured,
5.875% due 8/1/30 (b) 545,610
1,000,000 AAA Klamath Falls Wastewater Revenue, AMBAC-Insured,
5.500% due 6/1/25 1,062,160
600,000 Aa1* Port of Umatilla Water Revenue, LOC-ABN AMRO Bank N.V.,
6.650% due 8/1/22 (d) 621,696
- ---------------------------------------------------------------------------------------------------
2,637,522
- ---------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.0%
(Cost -- $49,416,132**) $52,017,789
===================================================================================================
(a) All ratings are by Standard & Poor's Ratings Service, except for those
identified by an asterisk (*) which are rated by Moody's Investors Service
and those identified by a double dagger (++) which are rated by Fitch
Ratings.
(b) All or a portion of this security is segregated for open futures contracts
commitments.
(c) Pre-Refunded bonds escrowed with U.S. government securities are considered
by the investment adviser to be triple-A rated even if the issuer has not
applied for new ratings.
(d) Income from these issues is considered a preference item for purposes of
calculating the alternative minimum tax.
(e) Inverse floating rate security-coupon varies inversely with level of short
term tax-exempt interest rates.
+ All or a portion of this security is held as collateral for open futures
contracts commitments.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 9 through 11 for definitions of ratings and abbreviations.
SEE NOTES TO FINANCIAL STATEMENTS.
8 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Bond Ratings (unaudited)
The definitions of the applicable rating symbols are set forth below:
Standard & Poor's Ratings Service ("Standard & Poor's") -- Ratings from "AA" to
"CCC" may be modified by the addition of a plus (+) or minus (-) sign to show
relative standings within the major rating categories.
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard & Poor's. Capacity to pay
interest and repay principal is extremely strong.
AA -- Bonds rated "AA" have a very strong capacity to pay interest and repay principal and
differs from the highest rated issue only in a small degree.
A -- Bonds rated "A" have a strong capacity to pay interest and repay principal although it is
somewhat more susceptible to the adverse effects of changes in circumstances and
economic conditions than debt in higher rated categories.
BBB -- Bonds rated "BBB" are regarded as having an adequate capacity to pay interest and repay
principal. Whereas they normally exhibit adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for debt in this category than in higher rated
categories.
BB, B, -- Bonds rated "BB", "B", "CCC", "CC" and "C" are regarded, on balance, as predominantly
CCC, speculative with respect to capacity to pay interest and repay principal in accordance with
CC the terms of the obligation. "BB" represents the lowest degree of speculation and "C" the
and C highest degree of speculation. While such bonds will likely have some quality and
protective characteristics, these are outweighted by large uncertainties or major risk
exposures to adverse conditions.
Moody's Investors Service ("Moody's") -- Numerical modifiers 1, 2 and 3 may be
applied to each generic rating from "Aa" to "Caa," where 1 is the highest and 3
the lowest ranking within its generic category.
Aaa -- Bonds rated "Aaa" are judged to be of the best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest payments are protected
by a large or by an exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds rated "Aa" are judged to be of high quality by all standards. Together with the "Aaa"
group they comprise what are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than in Aaa
securities.
A -- Bonds rated "A" possess many favorable investment attributes and are to be considered as
upper medium grade obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a susceptibility to
impairment some time in the future.
Baa -- Bonds rated "Baa" are considered as medium grade obligations, i.e., they are neither highly
protected nor poorly secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
B -- Bonds rated "B" generally lack characteristics of desirable investments. Assurance of
interest and principal payments or of maintenance of other terms of the contract over any
long period of time may be small.
Caa -- Bonds rated "Caa" are of poor standing. These issues may be in default, or present elements
of danger may exist with respect to principal or interest.
9 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Bond Ratings (unaudited) (continued)
Fitch Ratings ("Fitch") -- Ratings from "BBB" to "BB" may be modified by the
addition of a plus (+) or minus (-) sign to show relative standings with the
major rating categories.
AAA -- Bonds rated AAA by Fitch have the lowest expectation of credit risk. The obligor has an
exceptionally strong capacity for timely payment of financial commitments which is
highly unlikely to be adversely affected by foreseeable events.
BBB -- Bonds rated BBB by Fitch currently have a lower expectation of credit risk. The capacity
for timely payment of financial commitments is considered to be adequate. Adverse
changes in economic conditions and circumstances, however, are more likely to impair
this capacity. This is the lowest investment grade category assigned by Fitch.
BB -- Bonds rated BB by Fitch carry the possibility of credit risk developing, particularly as the
result of adverse economic change over time. Business or financial alternatives may,
however, be available to allow financial commitments to be met. Securities rated in this
category are not considered by Fitch to be investment grade.
NR -- Indicates that the bond is not rated by Standard & Poor's, Moody's or Fitch.
Short-Term Security Ratings (unaudited)
SP-1 -- Standard & Poor's highest rating indicating very strong or strong capacity to pay principal
and interest; those issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate demand obligation (VRDO)
rating indicating that the degree of safety regarding timely payment is either overwhelming
or very strong; those issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to the advent of the
VMIG 1 rating.
Abbreviations* (unaudited)
ABAG -- Association of Bay Area
Governments
ACA -- American Capital Assurance
AIG -- American International Guaranty
AMBAC -- American Municipal Bond
Assurance Corporation
BAN -- Bond Anticipation Notes
BIG -- Bond Investors Guaranty
CBI -- Certificate of Bond Issuance
CGIC -- Capital Guaranty Insurance
Company
CHFCLI -- California Health Facility
Construction Loan Insurance
CONNIE -- College Construction Loan
LEE Insurance Association
COP -- Certificate of Participation
EDA -- Economic Development
Authority
EDR -- Economic Development
Revenue
ETM -- Escrowed To Maturity
FGIC -- Financial Guaranty Insurance
Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage
Corporation
FLAIRS -- Floating Adjustable Interest Rate
Securities
FNMA -- Federal National Mortgage
Association
FRTC -- Floating Rate Trust Certificates
FSA -- Financing Security Assurance
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage
Association
10 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Abbreviations* (unaudited) (continued)
GO -- General Obligation
HDC -- Housing Development
Corporation
HFA -- Housing Finance Authority
IDA -- Industrial Development
Authority
IDB -- Industrial Development Board
IDR -- Industrial Development Revenue
INFLOS -- Inverse Floaters
ISD -- Independent School District
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors
Assurance Corporation
MFH -- Multi-Family Housing
MVRICS -- Municipal Variable Rate Inverse
Coupon Security
PCR -- Pollution Control Revenue
PSF -- Permanent School Fund
RAN -- Revenue Anticipation Notes
RIBS -- Residual Interest Bonds
RITES -- Residual Interest Tax-Exempt
Securities
TAN -- Tax Anticipation Notes
TECP -- Tax-Exempt Commercial Paper
TOB -- Tender Option Bonds
TRAN -- Tax and Revenue Anticipation
Notes
SYCC -- Structured Yield Curve
Certificate
VA -- Veterans Administration
VRDD -- Variable Rate Daily Demand
VRWE -- Variable Rate Wednesday
Demand
XLCA -- XL Capital Assurance Inc.
- -----------
* Abbreviations may or may not appear in the schedule of investments.
11 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Statement of Assets and Liabilities (unaudited) October 31, 2003
ASSETS:
Investments, at value (Cost -- $49,416,132) $52,017,789
Cash 822,006
Interest receivable 981,792
Receivable for Fund shares sold 108,978
- -----------------------------------------------------------------------------------------------
Total Assets 53,930,565
- -----------------------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 80,271
Payable to broker -- variation margin 79,063
Payable for Fund shares reacquired 34,000
Administration fee payable 9,682
Distribution plan fees payable 8,679
Investment advisory fee payable 6,131
Deferred compensation payable 5,707
Accrued expenses 29,078
- -----------------------------------------------------------------------------------------------
Total Liabilities 252,611
- -----------------------------------------------------------------------------------------------
Total Net Assets $53,677,954
===============================================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 4,999
Capital paid in excess of par value 51,961,435
Undistributed net investment income 50,559
Accumulated net realized loss from investment transactions and futures contracts (737,297)
Net unrealized appreciation of investments and futures contracts 2,398,258
- -----------------------------------------------------------------------------------------------
Total Net Assets $53,677,954
===============================================================================================
Shares Outstanding:
Class A 2,631,298
- -----------------------------------------------------------------------------------------------
Class B 1,341,540
- -----------------------------------------------------------------------------------------------
Class L 1,026,495
- -----------------------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $10.76
- -----------------------------------------------------------------------------------------------
Class B * $10.70
- -----------------------------------------------------------------------------------------------
Class L * $10.72
- -----------------------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 4.17% of net asset value per share) $11.21
- -----------------------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $ 10.83
- -----------------------------------------------------------------------------------------------
* Redemption price is NAV of Class B and L shares reduced by a 4.50% and
1.00% contingent deferred sales charge, respectively, if shares are
redeemed within one year from purchase payment (See Note 4).
SEE NOTES TO FINANCIAL STATEMENTS.
12 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Statement of Operations (unaudited)
For the Six Months Ended October 31, 2003
INVESTMENT INCOME:
Interest $1,505,178
- --------------------------------------------------------------------------------------------
EXPENSES:
Distribution plan fees (Note 7) 108,401
Investment advisory fee (Note 4) 80,808
Administration fee (Note 4) 53,872
Shareholder communications (Note 7) 22,565
Audit and legal 16,783
Shareholder servicing fees (Note 7) 10,544
Custody 8,979
Trustees' fees 5,094
Registration fees 2,019
Other 1,958
- --------------------------------------------------------------------------------------------
TOTAL EXPENSES 311,023
Less: Investment advisory and administration fee waivers (Note 4) (40,404)
- --------------------------------------------------------------------------------------------
NET EXPENSES 270,619
- --------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,234,559
- --------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FUTURES CONTRACTS (NOTES 5 AND 6):
Realized Gain From:
Investment transactions 137,504
Futures contracts 512,673
- --------------------------------------------------------------------------------------------
NET REALIZED GAIN 650,177
- --------------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments and Futures Contracts:
Begining of period 2,756,820
End of period 2,398,258
- --------------------------------------------------------------------------------------------
DECREASE IN NET UNREALIZED APPRECIATION (358,562)
- --------------------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS AND FUTURES CONTRACTS 291,615
- --------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS $1,526,174
============================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
13 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Statements of Changes in Net Assets
For the Six Months Ended October 31, 2003 (unaudited)
and the Year Ended April 30, 2003
October 31 April 30
- --------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 1,234,559 $ 2,390,463
Net realized gain (loss) 650,177 (561,167)
Increase (decrease) in net unrealized appreciation (358,562) 1,044,157
- --------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS 1,526,174 2,873,453
- --------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTES 3 AND 8):
Net investment income (1,193,610) (2,380,361)
In excess of net investment income -- (40,392)
- --------------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (1,193,610) (2,420,753)
- --------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 9):
Net proceeds from sale of shares 3,382,965 13,939,846
Net asset value of shares issued for reinvestment of dividends 707,953 1,380,720
Cost of shares reacquired (4,852,909) (8,843,569)
- --------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS (761,991) 6,476,997
- --------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS (429,427) 6,929,697
NET ASSETS:
Beginning of period 54,107,381 47,177,684
- --------------------------------------------------------------------------------------------------
END OF PERIOD* $53,677,954 $54,107,381
==================================================================================================
* Includes undistributed net investment income of: $ 50,559 $ 9,610
==================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
14 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Notes to Financial Statements (unaudited)
1. Significant Accounting Policies
Smith Barney Oregon Municipals Fund ("Fund"), a Massachusetts business trust,
is registered under the Investment Company Act of 1940, as amended, as a
non-diversified, open-end management investment company.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date; (b) securities are
valued at the mean between the quoted bid and asked prices provided by an
independent pricing service; (c) securities for which market quotations are not
available will be valued in good faith at fair value by or under the direction
of the Board of Trustees; (d) securities maturing within 60 days are valued at
cost plus accreted discount or minus amortized premium, which approximates
value; (e) gains or losses on the sale of securities are calculated by using
the specific identification method; (f) interest income, adjusted for
amortization of premium and accretion of discount, is recorded on an accrual
basis; (g) class specific expenses are charged to the Fund and each class;
investment advisory, administration fees and general Fund expenses are
allocated on the basis of relative net assets by class or on another reasonable
basis; (h) dividends and distributions to shareholders are recorded on the
ex-dividend date; (i) the character of income and gains to be distributed is
determined in accordance with income tax regulations which may differ from
accounting principles generally accepted in the United States of America; (j)
the Fund intends to comply with the applicable provisions of the Internal
Revenue Code of 1986, as amended, pertaining to regulated investment companies
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes; and (k) estimates and
assumptions are required to be made regarding assets, liabilities and changes
in net assets resulting from operations when financial statements are prepared.
Changes in the economic environment, financial markets and any other parameters
used in determining these estimates could cause actual results to differ.
15 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
2. Fund Concentration
Since the Fund invests primarily in obligations of issuers within Oregon, it is
subject to possible concentration risks associated with economic, political or
legal developments or industrial or regional matters specifically affecting
Oregon.
3. Exempt-Interest Dividends and Other Distributions
The Fund intends to satisfy conditions that will enable interest from municipal
securities, which is exempt from regular Federal income tax and from designated
state income taxes, to retain such tax-exempt status when distributed to the
shareholders of the Fund.
It is the Fund's policy to distribute dividends monthly. Capital gains
distributions, if any, are taxable to shareholders, and are declared and paid
at least annually. Additional taxable distributions may be made if necessary to
avoid a Federal excise tax.
4. Investment Advisory Agreement, Administration Agreement and Affiliated
Transactions
Smith Barney Fund Management LLC ("SBFM"), an indirect wholly-owned subsidiary
of Citigroup Inc. ("Citigroup"), acts as investment adviser to the Fund. The
Fund pays SBFM an investment advisory fee calculated at an annual rate of 0.30%
of the Fund's average daily net assets. This fee is calculated daily and paid
monthly. SBFM voluntarily waived $24,242 of its investment advisory fee for the
six months ended October 31, 2003.
SBFM also acts as the Fund's administrator for which the Fund pays a fee
calculated at an annual rate of 0.20% of the Fund's average daily net assets up
to $500 million and 0.18% of the Fund's average daily net assets in excess of
$500 million. This fee is calculated daily and paid monthly. SBFM voluntarily
waived $16,162 of its administration fee for the six months ended October 31,
2003.
Citicorp Trust Bank, fsb. ("CTB"), another subsidiary of Citigroup, acts as the
Fund's transfer agent. PFPC Inc. ("PFPC") acts as the Fund's sub-transfer
agent. CTB receives account fees and asset-based fees that vary according to
the size and type of account. PFPC is responsible for shareholder recordkeeping
and financial processing for all shareholder accounts and is paid by CTB. For
the six months ended October 31, 2003, the Fund paid transfer agent fees of
$6,560 to CTB.
16 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
Citigroup Global Markets Inc. ("CGM"), another indirect wholly-owned subsidiary
of Citigroup, acts as the Fund's distributor.
There are maximum initial sales charges of 4.00% and 1.00% for Class A and L
shares, respectively. There is a contingent deferred sales charge ("CDSC") of
4.50% on Class B shares, which applies if redemption occurs within one year
from purchase payment. This CDSC declines by 0.50% the first year after
purchase and thereafter by 1.00% per year until no CDSC is incurred. Class L
shares also have a 1.00% CDSC, which applies if redemption occurs within one
year from purchase payment. In certain cases, Class A shares have a 1.00% CDSC,
which applies if redemption occurs within one year from purchase payment. This
CDSC only applies to those purchases of Class A shares, which, when combined
with current holdings of Class A shares, equal or exceed $500,000 in the
aggregate. These purchases do not incur an initial sales charge.
For the six months ended October 31, 2003, CGM received sales charges of
approximately $18,000 and $7,000 on sales of the Fund's Class A and L shares,
respectively. In addition, for the six months ended October 31, 2003, CDSCs
paid to CGM were approximately $15,000 for Class B shares.
All officers and one Trustee of the Fund are employees of Citigroup or its
affiliates.
5. Investments
During the six months ended October 31, 2003 the aggregate cost of purchases
and proceeds from sales of investments (including maturities of long-term
investments, but excluding short-term investments) were as follows:
===============================================================
Purchases $3,657,850
- ---------------------------------------------------------------
Sales 5,288,508
===============================================================
17 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
At October 31, 2003, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
==================================================================
Gross unrealized appreciation $2,858,085
Gross unrealized depreciation (256,428)
- ------------------------------------------------------------------
Net unrealized appreciation $2,601,657
==================================================================
6. Futures Contracts
Securities or cash equal to the initial margin amount are either deposited with
the broker or segregated by the custodian upon entering into the futures
contract. Additional securities are also segregated up to the current market
value of the futures contracts. During the period the futures contract is open,
changes in the value of the contract are recognized as unrealized gains or
losses by "marking to market" on a daily basis to reflect the market value of
the contract at the end of each day's trading. Variation margin payments are
received or made and recognized as assets due from or liabilities due to
broker, depending upon whether unrealized gains or losses are incurred. When
the contract is closed, the Fund records a realized gain or loss equal to the
difference between the proceeds from (or cost of) the closing transactions and
the Fund's basis in the contract. The Fund enters into such contracts typically
to hedge a portion of its portfolio. The Fund bears the market risk that arises
from changes in the value of the financial instruments and securities indices.
At October 31, 2003, the Fund had the following open futures contracts:
Number of Basis Market Unrealized
Contracts Expiration Value Value Loss
======================================================================================================
TO SELL:
20 year, 6.000%
U.S. Treasury Bond 110 12/03 $11,755,664 $11,959,063 $ (203,399)
======================================================================================================
7. Class Specific Expenses
Pursuant to a Rule 12b-1 Distribution Plan, the Fund pays a service fee with
respect to its Class A, B and L shares calculated at an annual rate of 0.15% of
the average daily net assets for each respective class. In addition, the Fund
pays a distribution fee
18 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
with respect to its Class B and L shares calculated at an annual rate of 0.50%
and 0.55% of the average daily net assets of each class, respectively. For the
six months ended October 31, 2003, total Rule 12b-1 Distribution Plan fees,
which are accrued daily and paid monthly, were as follows:
CLASS A CLASS B CLASS L
- ------------------------------------------------------------------------
Rule 12b-1 Distribution Plan Fees $20,819 $49,622 $37,960
- ------------------------------------------------------------------------
For the six months ended October 31, 2003, total Shareholder Servicing fees
were as follows:
CLASS A CLASS B CLASS L
- ------------------------------------------------------------------------
Shareholder Servicing Fees $4,089 $3,707 $2,748
- ------------------------------------------------------------------------
For the six months ended October 31, 2003, total Shareholder Communication
expenses were as follows:
CLASS A CLASS B CLASS L
- ------------------------------------------------------------------------
Shareholder Communication Expenses $9,622 $7,356 $5,587
- ------------------------------------------------------------------------
8. Distributions Paid to Shareholders by Class
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 2003 APRIL 30, 2003
- ------------------------------------------------------------------------
CLASS A
Net investment income $652,604 $1,295,296
In excess of net investment income -- 21,980
- ------------------------------------------------------------------------
Total $652,604 $1,317,276
- ------------------------------------------------------------------------
Class B
Net investment income $315,289 $ 709,417
In excess of net investment income -- 12,038
- ------------------------------------------------------------------------
Total $315,289 $ 721,455
- ------------------------------------------------------------------------
CLASS L
Net investment income $225,717 $ 375,648
In excess of net investment income -- 6,374
- ------------------------------------------------------------------------
Total $225,717 $ 382,022
- ------------------------------------------------------------------------
19 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
9. Shares of Beneficial Interest
At October 31, 2003, the Fund had an unlimited number of shares of beneficial
interest authorized with par value of $0.001 per share. The Fund has the
ability to issue multiple classes of shares. Each share of a class represents
an identical interest and has the same rights, except that each class bears
certain direct expenses, including those specifically related to the
distribution of its shares.
Transactions in shares of each class were as follows:
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 2003 APRIL 30, 2003
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------
CLASS A
Shares sold 173,551 $ 1,865,848 494,295 $ 5,307,517
Shares issued on reinvestment 35,752 384,448 67,546 722,152
Shares reacquired (179,145) (1,927,768) (245,716) (2,628,613)
- ---------------------------------------------------------------------------------------------------
Net Increase 30,158 $ 322,528 316,125 $ 3,401,056
- ---------------------------------------------------------------------------------------------------
CLASS B
Shares sold 47,142 $ 505,493 323,629 $ 3,453,713
Shares issued on reinvestment 16,678 178,348 38,971 414,147
Shares reacquired (200,547) (2,138,606) (501,978) (5,322,004)
- ---------------------------------------------------------------------------------------------------
Net Decrease (136,727) $ (1,454,765) (139,378) $ (1,454,144)
- ---------------------------------------------------------------------------------------------------
CLASS L
Shares sold 94,001 $ 1,011,624 483,186 $ 5,178,616
Shares issued on reinvestment 13,552 145,157 22,960 244,421
Shares reacquired (73,266) (786,535) (83,771) (892,952)
- ---------------------------------------------------------------------------------------------------
Net Increase 34,287 $ 370,246 422,375 $ 4,530,085
- ---------------------------------------------------------------------------------------------------
10. Subsequent Event
The Fund has received the following information from Citigroup Asset Management
("CAM"), the Citigroup business unit which includes the Fund's Investment
Manager and other investment advisory companies, all of which are indirect,
wholly-owned subsidiaries of Citigroup. CAM is reviewing its entry, through an
affiliate, into the transfer agent business in the period 1997-1999. As CAM
currently understands the facts, at the time CAM decided to enter the transfer
agent business, CAM sub-contracted for a period of five years certain of the
transfer agency services to a third party and also concluded a revenue
guarantee agreement with this sub-contractor providing that the sub-contractor
would guarantee certain
20 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
benefits to CAM or its affiliates (the "Revenue Guarantee Agreement"). In
connection with the subsequent purchase of the sub-contractor's business by an
affiliate of the current sub-transfer agent (PFPC Inc.) used by CAM on many of
the funds it manages, this Revenue Guarantee Agreement was amended eliminating
those benefits in exchange for arrangements that included a one-time payment
from the sub-contractor.
The Boards of CAM-managed funds (the "Boards") were not informed of the Revenue
Guarantee Agreement with the sub-contractor at the time the Boards considered
and approved the transfer agent arrangements. Nor were the Boards informed of
the subsequent amendment to the Revenue Guarantee Agreement when that occurred.
CAM has begun to take corrective actions. CAM will pay to the applicable funds
$16 million (plus interest) that CAM and its affiliates received from the
Revenue Guarantee Agreement and its amendment. CAM also plans an independent
review to verify that the transfer agency fees charged by CAM were fairly
priced as compared to competitive alternatives. CAM is instituting new
procedures and making changes designed to ensure no similar arrangements are
entered into in the future.
CAM has briefed the SEC, the New York State Attorney General and other
regulators with respect to this matter, as well as the U.S. Attorney who is
investigating the matter. CAM is cooperating with governmental authorities on
this matter, the ultimate outcome of which is not yet determinable.
21 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Financial Highlights
For a share of each class of beneficial interest outstanding throughout each
year ended April 30, unless otherwise noted:
CLASS A SHARES 2003(1)(2) 2003(2) 2002(2) 2001(2) 2000(2) 1999(2)
- -------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.70 $ 10.57 $ 10.33 $ 10.02 $ 10.87 $ 10.76
- -------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment income(3)(4) 0.26 0.52 0.53 0.54 0.51 0.49
Net realized and unrealized
gain (loss)(4) 0.06 0.13 0.25 0.31 (0.84) 0.20
- -------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.32 0.65 0.78 0.85 (0.33) 0.69
- -------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.26) (0.51) (0.54) (0.54) (0.50) (0.49)
Net realized gains -- -- -- -- (0.02) (0.09)
In excess of net investment income -- (0.01) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------
Total Distributions (0.26) (0.52) (0.54) (0.54) (0.52) (0.58)
- -------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $ 10.76 $ 10.70 $ 10.57 $ 10.33 $ 10.02 $ 10.87
- -------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(5) 2.97%++ 6.29% 7.67% 8.62% (3.01)% 6.56%
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (000S) $ 28,320 $27,820 $24,163 $16,657 $14,272 $15,994
- -------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(3) 0.73%+ 0.81% 0.77% 0.82% 0.83% 0.87%
Net investment income(4) 4.86 + 4.85 4.98 5.23 5.02 4.49
- -------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 7% 19% 20% 35% 81% 28%
===================================================================================================================
(1) For the six months ended October 31, 2003 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) The investment adviser and administrator voluntarily waived all or part
of their fees for the six months ended October 31, 2003 and the five
years ended April 30, 2003. If such fees were not waived and expenses
were not reimbursed, the per share effect on the net investment income
and the ratios of expenses to average net assets would have been as
follows:
Expense Ratios
Per Share Decreases Without Fee Waivers
to Net Investment Income and Reimbursements
---------------------------------------------- -------------------------------------------
2003(1) 2003 2002 2001 2000 1999 2003(1) 2003 2002 2001 2000 1999
-------- ------- ------- ------ ------ ------- -------- ------ ------ ------ ------ ------
Class A $ 0.01 $ 0.02 $ 0.02 $ 0.02 $ 0.02 $ 0.01 0.88%+ 0.96% 0.92% 0.97% 0.98% 0.99%
(4) Effective May 1, 2001, the Fund adopted a change in the accounting method
that requires the Fund to amortize premiums and accrete all discounts.
Without the adoption of this change, for the year ended April 30, 2002, the
ratio of net investment income to average net assets would have been 4.99%.
Per share, ratios and supplemental data for the periods prior to May 1,
2001 have not been restated to reflect this change in presentation. In
addition, the impact of this change to net investment income and net
realized and unrealized gain was less than $0.01.
(5) Performance figures may reflect fee waivers and/or expense reimbursements.
Past performance is no guarantee of future results. In the absence of fee
waivers and/or expense reimbursements, the total return would be reduced.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
22 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout each
year ended April 30, unless otherwise noted:
CLASS B SHARES 2003(1)(2) 2003(2) 2002(2) 2001(2) 2000(2) 1999(2)
- -----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $10.63 $10.52 $10.29 $10.00 $10.85 $10.75
- -----------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment income(3)(4) 0.23 0.45 0.47 0.48 0.46 0.43
Net realized and unrealized
gain (loss)(4) 0.06 0.12 0.26 0.31 (0.84) 0.20
- -----------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.29 0.57 0.73 0.79 (0.38) 0.63
- -----------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.22) (0.45) (0.50) (0.50) (0.45) (0.44)
Net realized gains -- -- -- -- (0.02) (0.09)
In excess of net investment income -- (0.01) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------
Total Distributions (0.22) (0.46) (0.50) (0.50) (0.47) (0.53)
- -----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $10.70 $10.63 $10.52 $10.29 $10.00 $10.85
- -----------------------------------------------------------------------------------------------------------------
TOTAL RETURN(5) 2.78%++ 5.53% 7.21% 8.06% (3.52)% 5.94%
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (000S) $14,357 $15,718 $17,014 $16,572 $16,199 $19,833
- -----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(3) 1.26%+ 1.39% 1.29% 1.35% 1.35% 1.39%
Net investment income(4) 4.32 + 4.26 4.46 4.72 4.49 3.97
- -----------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 7% 19% 20% 35% 81% 28%
==================================================================================================================
(1) For the six months ended October 31, 2003 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) The investment adviser and administrator voluntarily waived all or part
of their fees for the six months ended October 31, 2003 and the five
years ended April 30, 2003. If such fees were not waived and expenses
were not reimbursed, the per share effect on the net investment income
and the ratios of expenses to average net assets would have been as
follows:
Expense Ratios
Per Share Decreases Without Fee Waivers
to Net Investment Income and Reimbursements
----------------------------------------------- --------------------------------------
2003(1) 2003 2002 2001 2000 1999 2003(1) 2003 2002 2001 2000 1999
-------- ------ ------ ------ ------ ---------- -------- ----- ----- ----- ----- -----
Class B $ 0.01 $ 0.02 $ 0.02 $ 0.02 $ 0.02 $ 0.01 1.41%+ 1.54% 1.44% 1.49% 1.49% 1.51%
(4) Effective May 1, 2001, the Fund adopted a change in the accounting method
that requires the Fund to amortize premiums and accrete all discounts.
Without the adoption of this change, for the year ended April 30, 2002,
the ratio of net investment income to average net assets would have been
4.47%. Per share, ratios and supplemental data for the periods prior to
May 1, 2001 have not been restated to reflect this change in
presentation. In addition, the impact of this change to net investment
income and net realized and unrealized gain was less than $0.01.
(5) Performance figures may reflect fee waivers and/or expense
reimbursements. Past performance is no guarantee of future results. In
the absence of fee waivers and/or expense reimbursements, the total
return would be reduced.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
23 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout each
year ended April 30, unless otherwise noted:
CLASS L SHARES 2003(1)(2) 2003(2) 2002(2) 2001(2) 2000(2) 1999(2)(3)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $10.65 $10.53 $10.31 $10.01 $10.86 $10.76
- -----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment income(4)(5) 0.23 0.46 0.46 0.48 0.46 0.43
Net realized and unrealized
gain (loss)(5) 0.06 0.12 0.26 0.32 (0.84) 0.20
- -----------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.29 0.58 0.72 0.80 (0.38) 0.63
- -----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.22) (0.45) (0.50) (0.50) (0.45) (0.44)
Net realized gains -- -- -- -- (0.02) (0.09)
In excess of net investment income -- (0.01) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.22) (0.46) (0.50) (0.50) (0.47) (0.53)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $10.72 $10.65 $10.53 $10.31 $10.01 $10.86
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(6) 2.78%++ 5.57% 7.05% 8.10% (3.55)% 5.90%
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (000S) $11,001 $10,569 $6,001 $3,724 $2,997 $3,157
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(4) 1.34%+ 1.39% 1.35% 1.39% 1.39% 1.43%
Net investment income(5) 4.25 + 4.28 4.39 4.67 4.46 3.94
- -----------------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 7% 19% 20% 35% 81% 28%
=============================================================================================================================
(1) For the six months ended October 31, 2003 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) On June 12, 1998, Class C shares were renamed Class L shares.
(4) The investment adviser and administrator voluntarily waived all or part
of their fees for the six months ended October 31, 2003 and the five
years ended April 30, 2003. If such fees were not waived and expenses
were not reimbursed, the per share effect on the net investment income
and the ratios of expenses to average net assets would have been as
follows:
Expense Ratios
Per Share Decreases Without Fee Waivers
to Net Investment Income and Reimbursements
------------------------------------------------ ----------------------------------------
2003(1) 2003 2002 2001 2000 1999 2003(1) 2003 2002 2001 2000 1999
-------- ------- ------- ------- ------- ------- -------- ------ ------ ----- ----- -----
Class L $ 0.01 $ 0.02 $ 0.02 $ 0.02 $ 0.02 $ 0.01 1.49%+ 1.54% 1.50% 1.54% 1.53% 1.55%
(5) Effective May 1, 2001, the Fund adopted a change in the accounting method
that requires the Fund to amortize premiums and accrete all discounts.
Without the adoption of this change, for the year ended April 30, 2002,
net investment income, net realized and unrealized gain and the ratio of
net investment income to average net assets would have been $0.47, $0.25
and 4.40%, respectively. Per share, ratios and supplemental data for the
periods prior to May 1, 2001 have not been restated to reflect this
change in presentation.
(6) Performance figures may reflect fee waivers and/or expense
reimbursements. Past performance is no guarantee of future results. In
the absence of fee waivers and/or expense reimbursements, the total
return would be reduced.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
24 Smith Barney Oregon Municipals Fund 2003 Semi-Annual Report
SMITH BARNEY
OREGON MUNICIPALS FUND
TRUSTEES INVESTMENT ADVISER
Herbert Barg Smith Barney Fund
Dwight B. Crane Management LLC
Burt N. Dorsett
R. Jay Gerken, CFA
Chairman DISTRIBUTOR
Elliott S. Jaffe
Stephen E. Kaufman Citigroup Global Markets Inc.
Joseph J. McCann
Cornelius C. Rose, Jr. CUSTODIAN
OFFICERS State Street Bank and
Trust Company
R. Jay Gerken, CFA
President and Chief
Executive Officer TRANSFER AGENT
Andrew B. Shoup* Citicorp Trust Bank, fsb.
Senior Vice President and 125 Broad Street, 11th Floor
Chief Administrative New York, New York 10004
Officer
Richard L. Peteka SUB-TRANSFER AGENT
Chief Financial Officer
and Treasurer PFPC Inc.
Peter M. Coffey P.O. Box 9699
Vice President and Providence, Rhode Island
Investment Officer 02940-9699
Kaprel Ozsolak
Controller
Robert I. Frenkel
Secretary* and
Chief Legal Officer
*As of November 25, 2003.
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
This report is submitted for the general information of the
shareholders of Smith Barney Oregon Municipals Fund, but it may also
be used as sales literature when preceded or accompanied by the
current Prospectus, which gives details about charges, expenses,
investment objectives and operating policies of the Fund. If used as
sales material after January 31, 2004, this report must be accompanied
by performance information for the most recently completed calendar
quarter.
SMITH BARNEY OREGON MUNICIPALS FUND
Smith Barney Mutual Funds
125 Broad Street
10th Floor, MF-2
New York, New York 10004
For complete information on any Smith Barney Mutual Funds, including
management fees and expenses, call or write your financial
professional for a free prospectus. Read it carefully before you
invest or send money.
www.smithbarneymutualfunds.com
A description of the policies and procedures that the Fund
uses to determine how to vote proxies relating to portfolio
securities is available without charge, upon request, by
telephoning the Fund (toll-free) at 1-800-451-2010 and by
visiting the SEC's web site at www.sec.gov.
(Copyright) 2003 Citigroup Global Markets Inc.
Member NASD, SIPC
FD0820 12/03 03-5814
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES
FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal
financial officer have concluded that the registrant's disclosure
controls and procedures (as defined in Rule 30a- 3(c) under the
Investment Company Act of 1940, as amended (the "1940 Act")) are
effective as of a date within 90 days of the filing date of this
report that includes the disclosure required by this paragraph,
based on their evaluation of the disclosure controls and
procedures required by Rule 30a-3(b) under the 1940 Act and
15d-15(b) under the Securities Exchange Act of 1934.
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940
Act) that occurred during the registrant's last fiscal half-year
(the registrant's second fiscal half-year in the case of an
annual report) that have materially affected, or are likely to
materially affect the registrant's internal control over
financial reporting.
ITEM 10. EXHIBITS.
(a) Not applicable.
(b) Attached hereto.
Exhibit 99.CERT Certifications pursuant to section 302
of the Sarbanes-Oxley Act of 2002
Exhibit 99.906CERT Certifications pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this Report to be
signed on its behalf by the undersigned, there unto duly authorized.
SMITH BARNEY OREGON MUNICIPALS FUND
By: /s/ R. Jay Gerken
R. Jay Gerken
Chief Executive Officer of
SMITH BARNEY OREGON MUNICIPALS FUND
Date: December 29, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ R. Jay Gerken
(R. Jay Gerken)
Chief Executive Officer of
SMITH BARNEY OREGON MUNICIPALS FUND
Date: December 29, 2003
By: /s/ Richard L. Peteka
Chief Financial Officer of
SMITH BARNEY OREGON MUNICIPALS FUND
Date: December 29, 2003